Marco Rubio flip-flops on helping Puerto Rico

By Sun Sentinel Editorial Board

Dec 23, 2015 | 9:23 PM

Whether Puerto Rico should be granted bankruptcy protection is an important issue. Right now, though, we'll focus on a related issue of equal importance: Is the way Congress is handling Puerto Rico's economic plight still more evidence that America's political systems are bankrupt?

Sen. Marco Rubio, R-Fla., is a central figure in the debate. A recent New York Times article — "Inside the Billion-Dollar Battle for Puerto Rico's Future" — notes that Rubio dropped his initial efforts to help Puerto Rico after very wealthy bondholders to whom Puerto Rico owes billions of dollars objected.

The dishonesty of these efforts includes the allegation that letting Puerto Rico declare bankruptcy would be a taxpayer bailout of the island, whose 3.5 million residents are American citizens. In fact, bankruptcy would take money not out of the U.S. Treasury but out of the pockets of the wealthy investors and hedge funds who recently gave Puerto Rico $3 billion-plus.

They took that risk because they were attracted by the possibility of a 20 percent return on their investment. But now that Puerto Rico — which owes a total of about $70 billion — seems unable to pay, those investors want Congress to save them from looming losses.

One plan — by Sen. Orrin Hatch, R-Utah — would actually have Congress grant $3 billion in aid to Puerto Rico as an alternative to bankruptcy. The irony is that such a scheme would, in fact, be a taxpayer bailout. But, and this apparently is what counts, it would protect those wealthy donors/bondholders.

Rubio initially favored allowing Puerto Rico to declare bankruptcy, presumably because of Florida's increasingly influential Puerto Rican community. But as a presidential candidate, his focus has shifted from his Florida constituents to the very influential, though small, cadre of wealthy families that provide the money to keep national campaigns going.

Rubio and other bankruptcy opponents have not actually had to cast a vote on the issue. Bankruptcy authority for Puerto Rico was excluded from the recent $1.8 trillion budget deal to keep the federal government operating for another year.

In any case Rubio — true to his record of absenteeism — did not bother to show up to vote on that measure.

GOP leadership, meanwhile, has said that a separate Puerto Rico rescue measure probably will not come up for final action until the end of March — conveniently after presidential primaries in a majority of states, including Florida.

It is significant that while likely Democratic presidential nominee Hillary Clinton has been criticized for her close ties to Wall Street — and the criticism is well-founded — Clinton has said that she favors granting Puerto Rico bankruptcy authority.

If Puerto Rico is not allowed to force wealthy bondholders to take a significant "haircut," it will continue to be forced to make bond repayments a priority while making steeper cuts in already reduced services — such as health care — to its residents, 40 percent of whom live in poverty.

So this boils down to a classic case of the very rich protecting their assets at the expense of the have-nots. And they're doing so by using their cash-fueled political clout to control the politicians who supposedly look out for the interests of everyone.

Rubio, in particular, has emphasized that he hails from middle-class roots and will be a champion of the middle class.

It should be awkward, therefore, for a Hispanic candidate and alleged champion of the middle class to champion instead the bondholders who want to make Puerto Rico pay and pay.

It is true that Puerto Rico was too free-spending. Some additional austerity is called for. But so are some simple free-market basics. Those who took risks with their money should not be bailed out by politicians who are in their debt.